SB 2750

THE SENATE
S.B. NO.
2750
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
relating
to public lands.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
���� SECTION 1.� The
legislature finds that the State began entering into $1 commercial leases and
government use contracts for military and science usage of public lands in
1964.� These leases have enabled some of
the most profitable institutions throughout the country to generate hundreds of
millions of dollars while costing the State billions.� Additionally, the board of land and natural
resources has acknowledged that the State should no longer enter into commercial
leases or government use agreements for $1 because the State ultimately
shoulders the responsibility of the lessee.
���� The legislature further finds that
contractual agreements of $1 leases may be found unconscionable under common
law.� Unconscionability in contracts may
occur if there is procedural or substantive unconscionability.� Procedural unconscionability is present when,
during the contract's formation, at least one party does not have fair or
meaningful choice, there is misrepresentation, or there is unequal bargaining
power, among other factors.� Substantive
unconscionability, on the other hand, occurs when the contract's terms unfairly
benefit or harm one side, such as extremely unequal price compared to the value
exchanged.� Additionally, a contract is
most likely to be found unconscionable if both unfair bargaining and unfair
substantive terms are shown.� The
governor has recently stated that he is insisting on a "fair deal"
related to the renewal of the United States military's lease at the Pohakuloa
training area.� The lease for the Pohakuloa
training area was first signed in 1964 for $1.�
However, the governor has suggested that a new lease should be worth $10
billion.
���� The legislature believes that requiring
that all commercial leases and government use agreements involving public lands
be issued at market rate will allow the State to generate substantial revenue.� This revenue could be used to lower costs for
the State's residents by building new homes to relieve pressure on the State's
housing market while also financially empowering the State to invest in
renewable energy and safer infrastructure.
���� Accordingly, the purpose of this Act is to:
���� (1)� Increase
the maximum term for leases of public lands to ninety-nine years; and
���� (2)� Prohibit commercial leases and government use
agreements of public lands at rates below market rate, with exceptions.
���� SECTION 2.� Section 171-36, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:
���� "(a)�
Except as otherwise provided, the following restrictions shall apply to
all leases:
���� (1)� Options
for renewal of terms are prohibited;
���� (2)� No
lease shall be for a longer term than [[sixty-five]] ninety-nine
years, except in the case of a residential leasehold, which may provide for an
initial term of fifty-five years with the privilege of extension to meet the
requirements of the Federal Housing Administration, Federal National Mortgage
Association, Federal Land Bank of Berkeley, Federal Intermediate Credit Bank of
Berkeley, Berkeley Bank for Cooperatives, or Department of Veterans Affairs
requirements; provided that the aggregate of the initial term and extension
shall in no event exceed seventy-five years;
���� (3)� No
lease shall be made for any land under a lease that has more than two years to
run;
���� (4)� No
lease shall be made to any person who is in arrears in the payment of taxes,
rents, or other obligations owed to the State or any county;
���� (5)� No
lease shall be transferable or assignable, except by devise, bequest, or
intestate succession; provided that with the approval of the board, the
assignment and transfer of a lease or unit thereof may be made in accordance
with current industry standards, as determined by the board; provided further
that [[prior to]] before the approval
of any assignment of lease, the board shall have the right to review and
approve the consideration to be paid by the assignee and may condition its
consent to the assignment of the lease on payment by the lessee of a premium
based on the amount by which the consideration for the assignment, whether by
cash, credit, or otherwise, exceeds the depreciated cost of improvements and
trade fixtures being transferred to the assignee; provided further that with
respect to state agricultural leases, in the event of foreclosure or sale, the
premium, if any, shall be assessed only after the encumbrances of record and
any other advances made by the holder of a security interest are paid;
���� (6)� The
lessee shall not sublet the whole or any part of the demised premises, except
with the approval of the board; provided that [[prior to]] before
the approval, the board shall have the right to review and approve the rent to
be charged to the sublessee; provided further that in the case where the lessee
is required to pay rent based on a percentage of its gross receipts, the
receipts of the sublessee shall be included as part of the lessee's gross
receipts; provided further that the board shall have the right to review and,
if necessary, revise the rent of the demised premises based upon the rental
rate charged to the sublessee, including the percentage rent, if applicable,
and provided that the rent may not be revised downward;
���� (7)� The
lease shall be for a specific use or uses and shall not include waste lands,
unless it is impractical to provide otherwise;
���� (8)� Mineral
and metallic rights and surface and ground water shall be reserved to the
State; [[and]]
���� (9)� No
lease of public lands, including submerged lands, or any extension of any lease
of public lands shall be issued by the State to any person to construct, use,
or maintain a sunbathing or swimming pier or to use the lands for those
purposes, unless the lease, or any extension thereof, contains provisions
permitting the general public to use the pier facilities on the public lands
and requiring that a sign or signs be placed on the pier, clearly visible to
the public, that indicates the public's right to the use of the pier.� The board, at the earliest practicable date,
and where legally possible, shall cause all existing leases to be amended to
conform to this paragraph.� [[The term
"lease", for]] For the purposes of this paragraph, "lease"
includes month-to-month rental agreements and similar tenancies[[.]];
and
��� (10)� No
lease of public lands shall be issued by the State for a monetary amount that
is below market rate; provided that this paragraph shall not apply to:
��������� (A)� The department of Hawaiian home lands;
��������� (B)� The transfer of land to another state department or agency;
provided that the receiving department or agency shall retain the authority to
lease the land to third parties; provided further that any lease to a third
party shall not be below market rate; and
��������� (C)� Any ninety-nine-year leasehold-for-sale housing developments for
residents of the State."
���� SECTION 3.�
This Act does not affect rights and duties that matured, penalties that
were incurred, and proceedings that were begun before its effective date.
���� SECTION 4.�
Statutory material to be repealed is bracketed and stricken.� New statutory material is underscored.
���� SECTION 5.�
This Act shall take effect upon its approval.
INTRODUCED BY:
_____________________________
Report Title:
DLNR;
Public Lands; Leases; Unconscionability; Market Rate
Description:
Increases
the maximum term for leases of public lands to ninety-nine years.� Prohibits commercial leases and government
use agreements of public lands at rates below market rate, with exceptions.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.